Risk appetite wobbles again

Friday 19 April 2024

Last night Israel launched an attack on Iran ignoring the pleas of its allies not to do so and we've seen USDJPY dip to 153.60 capping core pairs too amid the JPY demand but the move was shortlived as further reports suggest that there'll be no further move by either side at this time. Cue USDJPY back up to test 154.50 and JPY supply returning to keep traders guessing.

Fed speak yesterday was hawkish that's keeping USD demand overall but we've seen more dovish ECB talk which has provided some fresh EUR supply. UK retail sales data earlier was disappointing also helping to cap GBP.

The Ukraine/Russia war remains sadly pushed back in the world's attention but the Middle East tensions still cast their own shadow. Remember as always to identify your preferred risk reward levels and let the algos do their thing along with the natural and speculative flows. Don't get greedy or over-analyse.

Equities duly fell on the Israel/Iran news but staging a small rally in early Europe as jury remains out. I still say markets are over valued/too high. WTI capped this time at $85.60 from testing $82.00 just prior to the ME news but now retreating again to post $82.25 as the second-guessing continues. Gold remains underpinned amid the wobbly risk tones, inflation fear and CB buying and surged to post new record highs of $2417 but falling back a little since as some profit-taking continues.

GBPUSD:  Holding 1.2390-00 with some GBPJPY dip demand returning after capping at 1.2470-80  then 1.2450 amid some USD demand returning and GBPJPY supply on the risk-off move. I remain a rally seller as we continue to range overall. EURGBP: Failing around 0.8570 again after holding 0.8550 as the ECB/BOE conjecture continues. GBPJPY: Capped at 192.70-80 again but holding 190.30 amid underpinned USDJPY and risk appeitite turning back up but sellers will remain poised in these fickle markets.

EURUSD: Support around 1.0610 this time but capping into 1.0660 as the ECB conjecture plays out along with fickle USDand risk tones. I remain a rally seller as my preferred side. USDJPY: Capping at 154.70 and a retreat to 153.60 before bouncing helped by some JPY supply returnning and general USD dip demand. I still say we'll end up lower but still expecting dip demand in the current scenario of no/delayed FOMC cuts and no Japanese FX intervention.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk